‘The Doha Round now is about trade politics'

Critics of the World Trade Organisation might want an official burial to the protracted global trade talks as the Doha Round has long been dead. However, the WTO Director-General, Mr Pascal Lamy, says the Round, launched in 2001 for further liberalisation of world trade, is only deadlocked. He has been tirelessly touring the world talking to political, business and civil society leaders on the benefits of concluding the Round. In Delhi earlier this week, Mr Lamy spoke to Business Line on matters including the Round's future and the global trade forecast.

What is the current state of negotiations?

When you look at the WTO commitments from members, we have three regimes — that of the developed, emerging and poorer developing countries.

The negotiations are stalemated in the debate between the US and emerging countries (including India).

The US says ‘since you have now emerged, you should eliminate duties like us on chemicals, industrial machinery and electronics'.

The emerging countries say ‘we accept we are not like LDCs, but we don't want to be treated like developed countries because of our development challenges'. That is where the problem lies. But I am not prescribing a solution.

India still has huge development challenges and it needs to reaffirm this reality. But what an average westerner sees of China or India is their shining side. India and China also want the shining side of their reality projected abroad.

If developed countries are convinced that India or China is like them, they will ask for a level playing field in international trade rules. Therefore, people should understand the whole reality rather than the perception they have of the reality.

The issue now is not trade policy, but trade politics. It is my duty and that of political leaders to put perceptions in line with reality instead of using their perceptions to antagonise.

World trade and its issues have changed a lot since the Round started in 2001. Does it make sense to arrive at an agreement so late with the same old mandate?

Nobody remembers who accepted what in the tariff reductions negotiations in the (previous) Uruguay Round. What people remember is that the global trading system was strengthened.

And this is why it could work efficiently during the present economic crisis. So, on top of the balance of concessions, there is a virtue in strengthening the system and making it more predictable. Stabilising market openness through a global trade deal is a big plus for the conduct of business.

Can one expect any forward movement on Doha Round after the Ministerial Meeting in December?

WTO is a forum not only for negotiation, but also for implementation, litigation and capacity-building. The real challenge of the meeting is for the Ministers to draw a road map on all these WTO activities for the next two years.

Is there the political will to break the deadlock?

I have not heard any of the 153 WTO members saying ‘we should throw in the towel'. Most members, including China and India, want to conclude the Round; but they haven't yet found a way to do that.

But they say serious engagement from the US can be expected only in 2013 when its new President takes charge?

We need to sustain a negotiating and implementation agenda that goes beyond the volatility of short-term political factors. No international negotiation will be possible if you have to stop negotiations when there is election somewhere.

What do you have to say on India's efforts?

India is cooperative, proactive, and trying to find solutions. India has offensive and defensive interests and I don't expect India to surrender on either of these fronts.

Has the delay in concluding the Round dented WTO's credibility?

The credibility of the WTO was tested during the recent economic crisis. The WTO is an insurance policy against protectionism and it did work during that time. But if the Doha Round is procrastinating, there is a risk of this credibility being dented.

Our mission is not only to implement existing rules, which I think we are doing rather well, but also to adjust trade regulations to the changes in world trade. If we cannot do that, we risk having a problem.

Are you considering a ‘Lamy Draft' to save the Round?

It has always been an option. But it is the only bullet that I have got. When you have only one bullet, you better pull the trigger at the right moment and on target.

For the moment, I don't agree that given where we are, pulling the trigger would be a major contribution. My first duty is to do no harm.

What is your take on the global trade prospects?

There are two engines — a slow one including the US, European Union and Japan, with 2 per cent growth, and a fast one i.e developing countries with 6 per cent growth.

This growth differential is increasing. Our forecast of 6.5 per cent growth in world trade volume this year may be revised downwards in line with a downturn in demand.

A growth differential in itself is not the reason for reduction of trade. On the contrary, some say the only way developing countries can sustain this growth is to keep importing equipment and consumer goods to satisfy their domestic consumption.

So the risks are less on trade volumes than on the resurgence of protectionist tendencies which so far have been reasonably well contained during the crisis.

The major risk for the world economy from this possible downward revision of growth is the permanence of high unemployment which then triggers protectionism. Therefore, we have to remain very vigilant.

Do you see the Doha Round being completed before your term ends in September 2013 so that you can leave with head held high?

I don't know. Whether or not the Round will be concluded and when is not in my hands, but that of the members. I am just the facilitator or the midwife.

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